Manufacturing for Private Label: Resources and Opportunities
The concept of manufacturing for private labels is a global phenomenon whereby goods manufactured by one company are offered under the label of another brand. That other brand often is that of a supermarket but more and more new brand owners are starting to outsource all of their manufacturing.
The representative body for four thousand such companies around the world is The Private Label Manufacturers Association (PLMA) which was founded in 1979. It is non-profit making and provides invaluable support to member manufacturers in more than 70 countries.
The PLMA which held its World Private Label International Trade Show in Amsterdam this month considers that private label manufacturers fall into four categories. There are large national brand manufacturers that use their excess plant capacity to supply store brands, smaller concerns with niche product lines that produce for store brands almost exclusively, major retailers and wholesalers that use their own manufacturing facilities to provide store brands from their own manufacturing facilities and regional brand manufacturers that target particular markets for the products produced.
According to global data and market intelligent experts, IRI, private label products continue to come under pressure across Europe. IRI’s report last year, ‘Private Label in Western Economies’, expressed the view that price wars, promotions and shopping habits are all challenging the status of private label.
Referring to UK supermarkets, IRI attributes the annual decrease of private labels to ‘growth from discounters depressing their sales, especially across the private label economy range’. The report also cites the surge in popularity of discount retailers such as Aldi and Lidl as a factor in moving away from ‘own-label’ brands.
The findings of Fona International, based in Geneva, add further clarity to the fortune and fluctuations of private label products. Fona maintain that historically private label brands took their lead from national conglomerates when it came to flavour innovation but that now many private label brands are using flavour as their ‘secret weapon’.
These days, the insistence of health-conscious consumers on ‘clean label and ingredient sourcing’ reflects a critical industry trend and this preference for private label products is expected to increase as awareness grows. The main ingredients for healthy eating are now perceived as quality and lack of artificial ingredients, as well as value.
There are several KLBD certified companies which exemplify the best of private label manufacturing and several of these have exhibited at PLMA shows. One is family-run, Churchill’s Confectionery Ltd, which was established 25 years ago and produces product for sale in the UK as well as sixty countries worldwide, including duty-free concessions. As well as a wide range of mouth-watering varieties, the company is renowned for its souvenir tins, many of which feature iconic London scenes.
Panesar Foods was also founded as a family business in 1992 and is widely respected as a company which can handle entire packaging, design and food manufacture requirements in an outsourced capacity for both UK and overseas markets. Starting with just four products, its range of condiments, sauces and other speciality foods has now expanded to 750 products and caters for speciality, mainstream and own label brands.
Another exhibitor at PLMA has been The Bridge srl, a manufacturer of exciting innovative dairy alternatives including drinks, creams and desserts. KLBD certified in 2013, Eva Pfeffer commented last year that certification has been valuable for both those following a kosher diet and those who do not, adding, “An increasing number of people who don’t follow a Kosher diet, choose Kosher certified products considering them high quality products.” According to Mintel, one in five households in the UK purchases dairy free milk or drinks made from plant based alternatives.
Another company which supplies retail and wholesale grocery chains on a large scale is AIB Foods and they produce authentic and traditional Eastern flavours amongst their innovative products, including turmeric powder, cloves, coriander seeds, and a host of other spices too as well as Indian snacks.
‘Your brand; Our trusted Expertise’, is a fitting slogan for leading provider of contract manufacturing services, March Foods Ltd. Operating from a large manufacturing base in Cambridgeshire, they provide a comprehensive production and packing service for brand owners and number most of the large UK supermarkets and several global conglomerates amongst their prestigious clients.
Cofresh Snack Foods UK a KLBD certified supplier of innovative Indian snacks has now branched out in to healthier snacking using ingredients and flavourings such as hummus, lentil and quinoa. Although now based in Leicester the business was founded in Kenya and moved to the UK in 1974 by founder and current owner Dinesh Patel. The snacks are all vegetarian but some are additionally gluten free, kosher certified and enjoyed by one and a half million consumers in the UK alone.
As can be seen, private label manufacturing is thriving throughout the world and a further success story is KLBD certified Silver Pail Dairy based in Cork. The company has been involved with private label manufacturing for over ten years and has the capacity to produce high volume quality premium ice cream for global distribution, as well as frozen yoghurt, sorbet and ice cream cakes.
American global banking and asset management firm, William Blair, was unequivocal in its prediction for private label categories: ‘Millennials are brand agnostic. They will be responsible for the bulk of consumer purchasing decisions over the next decade and they are more receptive to private-label products than baby boomers’.
As a brand owner the opportunities are there to introduce new ranges of products from manufacturers that already have substantial experience of kosher certification.